NFO alert: Nifty500 Multicap 50:25:25 Index Fund, Aditya Birla SL Nifty India Defence Index Fund, Motilal Oswal Business Cycle Fund

NFO alert: There are a few new fund offers launched this week. NFOs pertain to the introduction of a fresh mutual fund scheme by an Asset Management Company (AMC) or fund house. Throughout an NFO, the fund house invites investors to participate in the acquisition of units within the new scheme. This marks the primary stage when the fund is accessible for investment, usually encompassing a predetermined subscription period. Following the closure of the NFO, regular trading activities commence.

Here are the top three NFOs this week:

1. HDFC MF's Nifty500 Multicap 50:25:25 Index Fund

HDFC Mutual Fund has announced the launch of the HDFC Nifty500 Multicap 50:25:25 Index Fund, a passively managed fund aimed at tracking the Nifty500 Multicap 50:25:25 Total Returns Index. The fund has opened today (August 6) and will close on August 20, 2024. Nirman Morakhia and Arun Agarwal will manage the fund.

This particular index fund may suit investors seeking long-term wealth creation from the growth potential of NIFTY 500 stocks, but with a differentiated weightage method. 

Investment details

Investors have to make a minimum investment of Rs 100 during both the NFO period and the continuous offer period. The scheme will be benchmarked against Nifty500 Multicap 50:25:25 Index.

Investors seeking returns aligned with the long-term performance of the Nifty500 Multicap 50:25:25 Index Total Return Index, before fees and expenses, and prefer investing in equity securities represented by the Nifty500 Multicap 50:25:25 Index Total Return Index. It's essential to note that the principal investment in this scheme carries a "very high" risk level, as per the riskometer classification of the scheme.

“At HDFC Mutual Fund, our mission to be the wealth creator for every Indian continues to drive us to offer a wide range of investment solutions to meet the needs of investors. We remain committed to delivering excellence in Index Solutions, leveraging our 20+ years of expertise in this space. This scheme enables investors to participate in India’s growth story comprehensively by offering exposure to Nifty 500 stocks with an allocation of 50% to largecaps, 25% to midcaps, and 25% to smallcaps. This differentiated approach aims to harness the stability of established companies while tapping into the growth potential of emerging ones,” said Navneet Munot, Managing Director and Chief Executive Officer, HDFC Mutual Fund.

2. Aditya Birla SL Nifty India Defence Index Fund

Aditya Birla SL Nifty India Defence Index Fund would be an open-ended index fund replicating the Nifty India Defence Total Return Index. The new fund offer or NFO of the scheme will open for subscription on August 9 and will close on August 23. The scheme will be benchmarked against Nifty India Defence Total Return Index and will be managed by Haresh Mehta and Pranav Gupta.

The investment objective of the scheme is to provide returns that, before expenses, match the total returns of the securities represented by the Nifty India Defence Total Return Index, subject to tracking errors.

The minimum investment for lumpsum investment is Rs 500 and in multiples of Rs 100 thereafter. For monthly and weekly SIP, the minimum investment amount is Rs 500 and in multiples of Re 1 thereafter.

It will earmark its funds -- 95-100% in equity and equity-related securities constituting the Nifty India Defence Index, and 0-5% in debt and money market instruments (including Cash and Cash Equivalent).

The scheme will follow a passive investment strategy and will invest not less than 95% of its corpus in stocks comprising the underlying index and endeavour to track the benchmark index while minimizing the tracking error.

3.  Motilal Oswal Business Cycle Fund

Motilal Oswal is scheduled to launch its Business Cycle fund on Wednesday. This fund focuses on long-term capital growth through primarily investing in equity and equity-related assets. The thematic business cycle funds are actively managed, giving fund managers the flexibility to make investment decisions based on their evaluations of economic indicators and business cycle patterns.

The new fund offer of the scheme will close on August 21. The investment objective of the scheme, which will be managed by Ajay Khandelwal, Niket Shah, Santosh Singh, Atul Mehra, Rakesh Shetty, and Sunil Sawant, is to achieve long-term capital appreciation by predominantly investing in equity and equity related instruments of companies by investing with a focus on riding business cycles through allocation between sectors and stocks at different stages of business cycles. The scheme will be benchmarked against Nifty 500 TRI.